2014 Automotive Sustainability Report

2014 Automotive Sustainability Report – The 15th edition

SMMT’s 15th Sustainability Report highlights the significant progress achieved across the UK automotive sector in 2013, as industry continues to improve resource efficiency, boost output, invest in people and lead the decarbonisation of road transport.

What is sustainability?

Sustainability is achieving the right balance of economic progress, environmental care and social responsibility.

Another widely-cited definition from the 1987 Brundtland Report states, “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

New vehicle registrations

The new car market rose 10.8% to 2.24 million units in 2013 – its highest volume since 2007.

Commercial vehicle (CV) volumes grew almost 15% in 2013, as the light commercial vehicle (LCV) market continued to recover from a disappointing 2012 and benefited from the wider economic growth and recovery in the construction sector.

Manufacturing performance

The automotive industry is a leader in technology and innovation, which has helped significantly to reduce its environmental impact over the last 15 years, as well as minimise costs and the use of resources.

CO2 and energy usage fell by 42% and 26% respectively over 15 years and 4% and 1% on 2012. Follow the links below for more detail.

Vehicle performance

Industry is committed to improving further the efficiency of its products, and invested heavily in technology to deliver a reduction in CO2 and other emissions.

However, there are areas where sharing efforts are required as technology alone does not hold all the answers.

An integrated approach is needed to enable all stakeholders – different industries, government, regulators, consumers and others – to work together and in parallel drive the agenda to introduce low carbon vehicles, and ultimately sustainable mobility, in a common direction.

End of life vehicles

Since 2006, 85% by weight of vehicles processed by manufacturers’ recycling networks has been recycled and recovered.

In the last few years the automotive industry’s partners have made significant investments to meet the challenge of the higher 2015 ELV Directive targets, which require 95% by weight of ELVs to be recycled and recovered.

The scrappage rate over the past four years has fallen to around 1.85m vehicles per year, well below the 2.1m per year average between 2003 and 2009, affected by lower new car registration volumes since the recession.

The UK automotive supply chain is broad and diverse. It includes companies across seven tiers involved in the manufacture of components, sub-assembly and full assembly supplied into vehicle manufacturers. In addition there is a multitude of companies that provide product development, inbound and outbound logistics and other support services.

The graphic shows that the UK automotive supply chain has the capability to cater for the majority of automotive supply needs.

Supply chain key performance indicators

There was a slight increase in production in the supply chain.

This resulted in higher absolute and relative energy usage and CO2 emissions. However, all remaining relative figures have improved, demonstrating the supply chain’s commitment to resource efficiency.

The production of renewable energy has doubled since 2011, from 6.3MWh to 13.7MWh, enough to power 3,250 homes.

UK sourcing

With the UK supply chain capable of providing 80% of vehicle components, and successive announcements of upcoming OEM product lines being placed in the UK, the opportunity for the UK supply chain is both clear and substantial.

£3 billion of sourcing opportunities from OEMs was highlighted by the Automotive Council in 2012.

Supply chain competitiveness

A challenge remains for UK supply chain companies to be globally competitive if they are to win new business from both existing and new customers.

While UK companies benefit from factors such as proximity, relatively stable domestic currency, a flexible labour force and the support of a large and growing domestic market, the competition from overseas remains strong.

Access to finance

Access to finance remains a key issue for some in the supply chain – especially SMEs. Industry is working to improve the situation in collaboration with the banking sector in the Automotive Council; for example, it is addressing tooling finance through dedicated funds, new credit models and banking initiatives. In November 2013 SMMT organised the latest in a series of Meet the Funder events to ensure that the supply chain has effective finance opportunities.

Business environment

The competitiveness of the UK’s business environment plays a key role, particularly in bringing new businesses and attracting new investment into the UK. Key concerns are energy costs, corporation tax, business rates and free trade relations with key automotive regions. With 80% of UK-manufactured vehicles exported, the UK’s relationships with the EU and other strategic markets are vitally important.

Technology

UK government and industry share an ambition to make the UK a global leader in the research, development, commercialisation and manufacture of low-carbon automotive technologies. This is best characterised by the joint industry- and government-funded £1 billion Advanced Propulsion Centre (APC). The APC aims to support a low-carbon technology supply chain capable of providing volume component manufacture for a global market.

Employees

The automotive industry continues its road to recovery, which is reflected in the growth of the number of jobs dependent on the sector increasing 6% to 772,000. Direct employment in automotive manufacturing also increased 9.5% to 161,000.

The industry takes the safety of its employees very seriously and has worked intensively over the years to embed safe procedures deeply in its operations. This has resulted in a significant reduction in the number of lost time incidents per 1000 employees from 13.4 in 2002, when records began, to 2.5 in 2013.

Promoting automotive careers to young people

The Automotive Sector Strategy, published in July 2013, focused heavily on skills – in particular, the shortage of engineers and other skilled workers. It stated that the UK needs to build up a comprehensive talent pipeline (including in the supply chain), starting in schools and encouraging a career path to apprenticeships, graduate and postgraduate degrees.

In October 2013 the automotive industry held See Inside Manufacturing. It also helped pilot government’s new reforms to apprenticeships through participation in the Trailblazers initiative

Developing skills in young people

The automotive Foyer Federation Working Assets programme, piloted in 2012, was continued in 2013 with BMW, Ford, Toyota and Unipart participating in the project.

The programme, supported by SMMT through its Charitable Trust, focused on developing the skills of young people from challenging backgrounds, enhancing their employability and helping them in the journey to becoming independent adults.

OLEV strategy and £500m ULEV funding

In July 2013, government allocated £500m funding for ultra-low emission vehicles (ULEV) from 2015 to 2020. A strategy was then published by the Office for Low Emission Vehicles (OLEV) to outline government’s long-term vision for ULEVs.

The OLEV package announced on 29 April 2014 includes the following funding streams: consumer incentives through the continuation of the Plug-in Car Grant and assistance for purchase of other vehicle types, further support for R&D, taxi infrastructure support and incentives, support for low emission buses, a new city scheme, infrastructure support including funding for a rapid charging network for electric vehicles and gas refuelling network for HCVs.

Closing the gap between real-world and test cycle performance

The original purpose of the current test cycle – NEDC for cars and vans was to provide comparable CO2 and emissions data between vehicles to help inform consumer purchasing decisions. The new Worldwide harmonised Light vehicles Test Procedure (WLTP) is designed to better represent real-world driving.

Connectivity

Direct communication between vehicles and infrastructure will ensure safer and more efficient traffic flows, with great benefits for drivers, pedestrians, the environment and the economy in an ever-busier world.